Lagging behind the market on convenience stores and online trading cost Morrisons dear over the festive period, bosses have admitted.
The Bradford-based supermarket group saw a 2.5 per cent fall in like-for-like sales in the six weeks to December 30 compared with a year earlier. It followed a 2.1 per cent decline in the previous quarter of 2012.
Morrisons is expected to be one of the big losers in the Christmas trading race as ‘floating’ shoppers – those not loyal to any grocery brand – opted to buy online or bought less as austerity hit their pockets.
Morrisons said it remained on track to meet profit expectations and the festive results were not as bad as some industry analysts had anticipated.
Chief executive Dalton Philips admitted that it needed to do more to promote its fresh food offering prepared by a wide range of butchers, bakers and fishmongers. This was a key reason behind the multi-million pound sponsorship and advertising deal with ITV stars Ant & Dec, which will promote Morrisons in a fifth of UK homes every Saturday.
Mr Philips believes that by delaying rolling out a full online grocery operation – Morrisons recently launched M Cellar, a new online wine business – the company would gain a “late mover advantage” by learning from the mistakes of others.
He said it was vital to ensure the right technology base as once a web operation was launched it was difficult to unravel.
Mr Philips said Morrisons would expand its chain of convenience stores – which was piloted in Ilkley – from 12 to 50 this year which, along with online trading, was a “hugely important” step for the business in a changing retail marketplace. It would be a key focus for new trading director Casper Maijer, who is joining Morrisons from Dutch supermarket group Ahold.
Competition over the Christmas period has been as fierce as ever, with the big players focused on promotional deals and money-off coupons.
Tesco sharpened its performance after a disastrous 2011 and is likely to show a modest return to like-for-like sales growth later this week, while Sainsbury’s will also be up by about one per cent in sales figures tomorrow. Morrisons has also been squeezed by further strong growth from discounters Aldi and Lidl.
Mr Philips said: “The environment over the Christmas period has continued to be challenging with hard-pressed consumers increasingly shopping to a budget and vouchering a prominent feature of a highly-promotional market.
“In a difficult market our sales performance was lower than anticipated, but we have a strong business and significant opportunities to advance our strategy.”
l Meanwhile, House of Fraser, which has a Skipton store, reported its “best-ever” Christmas performance. Sales were up 6.3 per cent in the six weeks to January 5, with online revenues up 48 per cent in the period as increasing numbers of customers shopped on the internet.